Former Qantas pilots lose close to $1 million each in insurance claim

Two former Qantas pilots are taking legal action over what they allege was a hidden clause in their staff superannuation policies that dudded them out of lump sum payments of close to $1 million each after illness ended their careers.

They have also called on finance sector regulators to examine their case as the Hayne royal commission focuses on the superannuation industry.

Anthony Byrnes and Campbell Gribble from Sydney were both members of Qantas Super, which included automatic insurance cover for total and permanent disability. They both took out separate income protection insurance to cover them to the age of 60.

The Qantas Super product disclosure statement they were given in 2005 did not provide any information about a disclaimer that would offset their claim to total and permanent disability by any income protection amount. When they applied for the lump sum benefit it was reduced from close to $1 million to nothing.

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“It’s Claytons insurance - the insurance you have when apparently there is none. They didn’t disclose offsetting or reducing the TPD amount in the product disclosure statement, by other insurance," Mr Byrnes said.

"TPD and income protection are different in nature, and the policies I took should not have interfered with each other. I prepared for a worst-case scenario - unfortunately that is what happened."

It’s Claytons insurance - the insurance you have when apparently there is none.

Former Qantas pilot Anthony Byrnes

Mr Byrnes, 46, worked for Qantas for 15 years before he suffered from a condition which caused migraines, dizziness and affected his balance, resulting in the loss of his pilot's licence.

“If the offsetting was properly disclosed, we could have made alternative insurance arrangements," he said.

Mr Gribble, 47, was employed with the airline for almost 18 years before being certified as unfit to fly after he suffered a heart attack and ongoing chronic fatigue related illness. He said Qantas Super had a moral and a legal obligation to disclose any factors that would render a critical insurance product worthless.

"The effect of losing my career and my health at just 43 is devastating and ongoing. Dealing with massive health issues, a young family and a non-paying insurer is a constant and overwhelming task," he said.

Two former Qantas pilots are claiming they have been dudded on their Qantas Super insurance policies.Credit:Bloomberg

"It is an interesting coincidence that the product disclosure statement was withdrawn and rewritten almost immediately after we pointed out how misleading we considered it to be."

Peter Koutsoukis from Maurice Blackburn Lawyers said the men were making a legal claim for alleged misleading and deceptive conduct on the part of Qantas Super.

He said the superannuation plan provided automatic cover in the form of a lump sum payment for total and permanent disability. Mr Byrnes is seeking $747,000 in damages and Mr Gribble, $943,000.

When they made a claim on Qantas Super, it agreed they were totally impaired and disabled but would offset any payment by the income protection payments they would receive until the age of 60.

"As a result the superannuation TPD cover was worthless," Mr Koutsoukis said.

"They paid fees for TPD cover for 14 and 18 years when all along that product was never going to pay them anything. This is a case of fees for no product.

"They were misled because the member booklet they were given in 2005 made no comment about any offest provisions, whereas it did make comments about offset provisions in relation to other things."

He said Qantas Super claimed the offsetting provisions were described in a Trust Deed which was never provided and in previous and more recent product disclosure booklets.

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"It's ridiculous to say they should go searching through old booklets to try to get the answers," Mr Koutsoukis said.

"You would only read the booklet that is current and the 2005 was the current one when they went off to get that extra income protection insurance.

"Anthony went to meet the CEO of Qantas Super in 2015 to air his grievances and two months later they issued a new booklet and in the new booklet they make it clear that income protection will be offset against the TPD lump sum."

A spokesman for Qantas Super, a wholly owned subsidiary of Qantas, said he could not comment on the specifics of any individual cases. It said the legal claims made on behalf of Mr Gribble and Mr Byrnes were "inaccurate and misleading".

“This insurance cover allows for the benefit to be reduced or offset if the member receives other benefits or income in relation to the same condition," he said.

“The principle of offsetting is not unusual, and it has been communicated to members in multiple documents over time.

“This part of the cover is designed to be a safety net for members but is not meant to provide for ‘double-dipping’ of insurance claims."

Mr Byrnes and Mr Gribble denied any attempt to double dip and said income protection and TPD insurance were unrelated policies that were not usually offset against each other.

Qantas Super chief executive Michael Clancy disputed that any premiums had been paid for the insurance cover, saying "the cost of providing this insurance was borne by Qantas". He said the 1995 and 2001 booklets "explained the process of offsetting clearly".

Anna Patty is Workplace Editor for The Sydney Morning Herald. She is a former Education Editor, State Political Reporter and Health Reporter. Her reports on inequity in schools funding led to the Gonski reforms and won her national awards. Her coverage of health exposed unnecessary patient deaths at Campbelltown Hospital and led to judicial and parliamentary inquiries. At The Times of London, she exposed flaws in international medical trials.